First Policy Year Claim

[bluemarlin08]

Had a client call that has a HSA with GR, bought in April 2007. Seems she has mad a few claims on her policy, nothing near her ded of 5600, and received a letter from GR telling her that before they can make a decision on their liability regarding her claims they need additional information, such as all info on current primary care doc, last seen, drug use, any thing in the past 10 years and she has to submit to them. I told her that all companies will review claims in the first year to determine if the claim was a pre x. I called GR and they said this letter was SOP. Have you guys encountered this, I understand their investigating but why ask the client to provide the info, client doesn't understand.

 

[somarco]

All carriers do this. They closely review any illness related claims filed in the year and particularly those filed in the first 6 months.

Carriers have a narrow window to detect fraud particularly when it comes to pre-ex conditions. Some are more judicious in their approach than others.

I have had a few clients who have had coverage rescinded for failure to disclose information and a few who have received retroactive rate adjustments due to their weight being more than what was stated on the application.

Even though your client has not hit their deductible, the carrier is still liable under the repricing mechanism. Once they reprice a claim they are, by inferrence, approving any future claims for related conditions.

 

[bluemarlin08]

Thank you for the info, I knew they reviewed claims the first year, just surprised about the letter to the client.

 

[TXINSURANCE]

GR is looking for a way to rescind and get out of the claim, lets not sugar coat this.

Carriers have installed new computer software and are getting VERY aggressive on rescinds, some worse than others.

Scenario #1 - Client breaks leg. Carrier pull med records to find any reason to get out of the claim - they find ONE slightly elevated BLOOD PRESSURE reading over 3 years ago, no rx, no treatment - client claims he was stuck in traffic on the way to the docs office and was in a bad mood. Carrier rescinds coverage because "had they known of unstable blood pressure they would have never issued the case" - they also rescinded ALL members not just the one in question. I won't tell you who they are but their color is BLUE.

Scenario #2 - Client discloses glaucoma on the application, it was waivered. Client goes in to change is RX for BP or CHOL I don't remember - it was disclosed on the application as well. Carrier pulls his records and finds MACLEAR DEGENERATION listed (spelling?) - remember glaucoma and related were waivered. Carrier rescinds all coverage.

There are a few dirty little secrets about individual coverage such as blocking business and rescinds. A carrier should be able to rescind but the line is being crossed when such rescind is truly warranted.

I am of the opinion it is virtually impossible to fill out an insurance application without missing something. Remember most applications have a EVER / CATCH ALL question, even if you were to have me fill out an application I guarantee you I would miss something they could rescind on my own policy.

Maybe the carriers need to have guidelines on rescinding that are clearly defined. The problem with this is it will lead to more APS / medical records pulls at time of application - and we all know what happens when the APS is pulled...

This is a major issue that all brokers need to be VERY careful to obtain FULL disclosure and put the ball back in the clients court during the enrollment process you need to have rock solid enrollment procedures.

 

[somarco]

A bit of an exaggeration there, Tx.

The LAST thing any carrier wants to do is rescind a policy.

You're a fool if you believe otherwise.

 

[TXINSURANCE]

A bit of an exaggeration there, Tx.

The LAST thing any carrier wants to do is rescind a policy.

You're a fool if you believe otherwise.

I wouldn't say I am a fool, I do have a different opinion apparently.

It is all about weighing out cost options with carriers. They know a claim costs $XXX and a typical rescind might cost $10k or more in legal expense.

It depends on the claim size and future claim issue. Rescinds are extremely common with Internet based sales - people are simply not as honest when they don't have someone staring at them across the kitchen table. For example less than 2% of my leads are smokers but the national smoker rate is 15% or so? Maybe higher depending on the area? It is a amazing no one on the Internet smokes? lol...

Carriers are getting very aggressive on rescinds, particularly first year claims. I have the stats to prove it - and a lot of this is based on computer software improvements over the last several years at many major carriers.

So yes there are a lot of times carriers are very aggressive on rescinds, but it will be something more than the sniffles.

My point is to have a very tight application process and enrollment consistencies to CYA when / if something comes back to bite you - remember it is always the brokers fault anyhow!!! lol...

 

[J.R.]

My point is to have a very tight application process and enrollment consistencies to CYA when / if something comes back to bite you - remember it is always the brokers fault anyhow!!! lol...

What are the steps you take to ensure that you have a tight application? This is one area that concerns me as I hear conflicting sides to how much information is put on an application (e.g., a cold a child had 3 years ago, etc. etc.).

 

[TXINSURANCE]

I don't know you operation - do you sell online or face to face? Paper or electronic?

 

[J.R.]

I don't know you operation - do you sell online or face to face? Paper or electronic?

100% of my sales are done online right now, although I do plan on working in some face to face appts. shortly

 

[TXINSURANCE]

OK - sounds great.

I would stick with the online, in my opinion after reading your blog. I have always sold 100% online, never sold a face to face it doesn't fit my business model.

Online can be tricky - we are one of the few ethical agencies online in my volume category. Here a few items that may help you:

1. IBOOMERANG - www.iboomerang.com - allows client to view the completed online application, then turn control over to them to "e-sign" the application. This eliminates a lot of the "I never saw it" and "I never signed anything" when the $#@! hits the fan.

2. CALL RECORDING - We installed a very simple piece of equipment that will record ALL line activity it sits between your wall jacks and is on a dedicated PC. Very easy to install but EVERYTHING is record and searchable, etc., etc., The unit is $400 (plus the cost of a cheap dedicated pc) I have the website bookmarked if you need it.

To me this is a big deal - if you are reading questions 100% as stated online and you have a recording of someone saying NO I NEVER HAD CANCER and turns out they did, etc., etc., You may have to disclose they are being recorded this may vary state to state, our phone system plays the notification when you dial in.

3. Good notes. We us ACT! you can buy it CHEAP on EBAY I have a seller I deal with if you need his / her name they are reliable and are legit copies. It is always helpful to have great notes of EVERY CALL and EVERY conversation.

4 E&O - I don't have a real high opinion of E&O since it can make you a target for the Attorneys, but it is a necessary evil I suppose if it makes you sleep better at night it is worth the $600 to $1000/year

5. INC / LLC - The best E&O policy on earth isn't worth anything compared to a good corporate structure such as INC, LLC. LLC is cheap and easy in most states. You will have to get your LLC licensed through MDI of course. I did mine in Texas for around $300 total maybe less but at least now I know for someone to come after my house, cars, is pretty difficult.

Just a few quick ones off the top of my head.... I wouldn't get too frustrated with cancels, pending cases not issuing as I read on your blog. You need to look at this from 30,000 feet.

If you are issuing 70,80,90% of cases than you are just fine. A few are without question going to slip through the cracks - particularly Internet business. I factor these things into my overall numbers.

Same issue with retention, which on Internet business is rather low.

I would stick with the Internet thing after reading your blog, you have potential to really grow this thing, I wouldn't lose focus I think you are pretty sharp and aware of a lot of things most people at your stage are not aware of.

Just watch out - because I just got my MD license last week... lol...

There is a big carrier coming that is going to shake up the MD market late this year early next year - PM me if you want the inside track.